‘Name and Shame’ to Halt U.K. Tax-Avoidance Schemes, Panel Says

Starbucks Corp. pledged in December to pay a "significant amount" of U.K. corporation tax in 2013 and 2014 "regardless of whether our company is profitable during these years," after the world's largest coffee-shop operator was criticized for not paying any tax for the past three years. Photographer: Chris Ratcliffe/Bloomberg

Sellers of such schemes are exploiting the inability of Her
Majesty’s Revenue & Customs to act quickly enough against the
use of loopholes in legislation or the abuse of tax reliefs, the
House of Commons Public Accounts Committee said in a report
published in London today.

“It is a game of cat and mouse and HMRC is losing,”
Margaret Hodge, the opposition Labour Party lawmaker who heads
the panel, said in an e-mailed statement. “The complexity of
tax law creates opportunities for avoidance, there are no
penalties to stop people promoting these schemes, and HMRC is
ineffective in challenging promoters who are deliberately
obstructive or deliberately sell schemes they know do not
work.”

The committee urged the tax agency to “get more robust in
its approach.” While at least 5 billion pounds ($7.7 billion)
were lost to tax avoidance last year, HMRC does not name
promoters or clients of schemes that don’t work, even though it
publicizes the details, the panel said.

“We have seen how public anger and consumer pressure can
influence large companies, such as Starbucks, to behave more
responsibly,” Hodge said.

Starbucks Corp. pledged in December to pay a “significant
amount” of U.K. corporation tax in 2013 and 2014 “regardless
of whether our company is profitable during these years,” after
the world’s largest coffee-shop operator was criticized by
members of the Public Accounts Committee for not paying any tax
for the past three years.

“We are glad the report exposes the practices of promoters
who sell tax-avoidance schemes to wealthy individuals,” HMRC
said in an e-mailed statement. “We have also already consulted
on strengthening the regulations around these schemes.”